Ex-Aide Explains His Whitewater Role to House Panel

By NEIL A. LEWIS

Published: July 29, 1994

WASHINGTON, July 28—
A group of present and former White House officials paraded before the House committee investigating the Whitewater affair today, several of them insisting that they did not press a senior Treasury Department official and friend of the President to remain involved in a politically sensitive investigation of an Arkansas savings and loan.

The primary witness today was Bernard W. Nussbaum, the former White House counsel who spent much of the morning answering questions before the House Banking Committee about his role in Whitewater-related matters.

Mr. Nussbaum is the only Clinton Administration official whose behavior and judgment has been criticized by the White House. On Tuesday, Lloyd N. Cutler, the current White House counsel, said Mr. Nussbaum had improperly pressured Roger C. Altman, the Deputy Treasury Secretary, not to recuse himself from an investigation into Madison Guaranty, an Arkansas savings and loan with ties to Mr. and Mrs. Clinton. Madison collapsed in 1989 at a cost to taxpayers of more than $60 million.

Mr. Altman at the time was also the acting head of the Resolution Trust Corporation, the regulatory agency that was overseeing the bailout of the savings and loan industry and in that role was investigating Madison.

Mr. Nussbaum, who was forced to resign his White House post in March over his actions in the Whitewater affair, offered a vigorous defense today of his behavior. He said he did nothing wrong in counseling Mr. Altman to remain in charge of the investigation of Madison, and he even suggested that it would have been irresponsible for Mr. Altman to step aside. He also suggested that Mr. Altman might have wanted to do so for personal convenience.

Testimony in Groups

After Mr. Nussbaum's testimony, which occupied much of the day, the committee examined en masse 10 current White House officials who occupied the witness table from end to end. When Representative Stephen L. Neal, Democrat of North Carolina, asked them a series of questions like, "Did any of you try to interfere in the investigation?" they responded simultaneously as a chorus, "No."

In its second day of hearings on Whitewater, the House Banking Committee continued to display its bitter partisan cleavage, with Republicans struggling to suggest a wide variety of unethical behavior on the part of Clinton Administration officials while the committee's Democrats laboring to press the idea that nothing of significance occurred.

It was apparent throughout the day that the Republicans were having difficulty gaining much traction on the Whitewater issue. After Mr. Cutler seemed to handle with ease most hostile Republican questioning on Tuesday, the Republicans decided to put forward a new strategy much as a baseball manager might shuffle a lineup to score some runs.

Instead of having each Republican member ask questions of Mr. Nussbaum, several of the lawmakers yielded their turns to two designated senior Republican members so that there could be some continuity to the questioning.

Questioner Seems to Stumble

Yet, that did not seem to produce much difference. Representative Jim Nussle of Iowa, one of the Republican's designated questioners, seemed to stumble when he tried to suggest that a fax sent from Mr. Altman in early 1993 was a clandestine effort to alert the White House to the Madison Guaranty problem. The fax contained nothing more than a year-old clip of an article from The New York Times.

Representative Jim Bacchus, Democrat of Florida, raised his arms and shouted: "Whoo, whoo" as if in mock amazement at Mr. Nussle's revelation.

In his earlier testimony, Mr. Nussbaum offered an elaborate defense of his conversation with Mr. Altman on Feb. 2, when he counseled him not to remove himself from the Madison Guaranty investigation. He said that Mr. Altman had been told by ethics officials that he was not obliged to remove himself from the case even though he was a friend and political associate of the President.

"If there is no legal or ethical reason for recusal, and Mr. Altman had said there was no legal or ethical reason for recusal, then the individual should do his or her sworn duty," Mr. Nussbaum testified.

Exploring Altman's Motives

In order to make his argument, however, Mr. Nussbaum appeared to trivialize Mr. Altman's motives for considering recusal from the Madison case. He said someone like Mr. Altman should not avoid "his responsibilities simply because they are difficult or inconvenient or because officials find it personally or politically expedient to step aside."

In fact, Mr. Altman has provided a starkly different reason for considering stepping aside. He has said he was uneasy about the appearance of his involvement in overseeing the case because of the Clintons' connection. The regulatory agency had referred the matter of Madison to the Justice Department for possible prosecution and in that referral listed the Clintons as possible beneficiaries of bank fraud by Madison, which was owned by James B. McDougal. Mr. McDougal and his wife were partners with the Clintons in Whitewater, a failed real estate venture in Arkansas.

Photo: Bernard W. Nussbaum, the former White House counsel, testifying yesterday before the House committee investigating the Whitewater affair. (Stephen Crowley/The New York Times)